On a hot summer morning in Chennai, a long line of job-seeking IT professionals stood outside the gates of a multinational company. The professionals, mostly with two to three years of experience, were reluctant to comply even as the security guard yelled at them to leave. Many were angry and confused that they were not even being allowed inside for the interview despite meeting all eligibility criteria.
“They are not allowing us, saying we came late. But I came 30 minutes before time,” said 23-year-old Shweta, a native of Chennai with two years of work experience in the IT sector.
She claimed that the real reason for the company turning her down is that more than enough people had turned up for the interview.
“We feel that just having a degree is not of much use these days. There are no vacancies for bulk recruitment, that is the problem,” she said.
Shweta feels that the “IT trend”, which began during the Covid lockdown, “has flipped upside down.”
The “IT trend” here refers to the frenzied hiring by companies such as Infosys, TCS, Wipro and HCL Tech during the Covid lockdown. These technology companies fought over the last morsels of talent they could find as they struggled to deal with a deluge of new contracts from US and European companies desperate to shift from ‘physical’ operations to ‘digital’.
Employees with experience suddenly found themselves sitting on offers of 50%, 70% or even 100% hikes from rival employers. Fresh graduates could barely walk out of their institutes when they were swooped down upon by companies.
Things, however, seem to have come full circle.
According to a report by the Times of India, last year, the hiring at India’s IT companies was the lowest in two decades.
TCS, the biggest IT company in India and the country’s largest private sector employer, has seen its headcount go down by around 12,000 over the last two quarters – a far cry from two years ago, when it was hiring 30,000-35,000 people every quarter.
“There is definitely a big drop in hiring in the IT sector now,” says Kapil Joshi, Deputy CEO of IT Staffing for Quess Corp, a Bengaluru-based staffing and facility management company.
Joshi identifies three major reasons for this decline – geopolitical and macroeconomic conditions, high inflation and most importantly, the advent of generative AI and automation.
“We have seen many organizations laying off employees, not from the cost-cutting point of view, but for setting up their priority in line with what generative AI can do to their business or organization,” Joshi said.
Generative AI refers to the use of artificial intelligence to create content – such as code and conversations – rather than to just predict the behavior of human beings and machines.
Many of the easier-to-automate jobs are being eaten up by AI, pointed out Asif, a senior software engineer at a multinational software company in Bangalore.
"Jobs like those related to customer care are all increasingly being replaced by chat bots.This definitely leads to layoffs and less recruitments. Let's say initially ten people used to do a job. Now with the help of AI tools, the work done by the human force is being replaced. Now the company just needs two people to manage the tool. Eight people have lost their jobs," he explained.
However, he says, the change is also creating some opportunities.
“New jobs are being created. We'll need people who know how to work with the new tools. At least in the initial stage, when the AI is still learning, we'll need people to teach it. That creates job opportunities,” he added.
Another reason for the recent crisis in hiring, according to Joshi, is that most IT companies have hired so many in recent quarters that they don't feel the need for more, particularly given the sharp slowdown in order flows.
“In India, during FY22, there was a talent war like situation. Most of the companies had done lots of hiring, the headcount addition in the industry was more than 3 lakhs [per year]...Post Covid, companies are focusing more on fuller utilization of these resources, the priority has changed over the last two years.”
Trouble at the bottom
The most affected by this downturn in fortunes is, unsurprisingly, those at the bottom of the pyramid - the so-called freshers or fresh graduates.
A Times of India report puts the number of freshers hired by IT companies in India in 2022 at a whopping 6 lakh. Seemingly adhering to the global trend towards downsizing, the companies in India are also prioritizing internal mobility. Which means they are resorting to fuller utilization of already available resources rather than taking in fresh talents.
“If you ask me who has suffered the most due to the current slowdown in hiring, it is definitely the freshers. In the current financial year we are expecting approximately 1.5 lakh hirings at the fresher level compared to 2.5 lakh last year. You can see the decline,” says Joshi.
For freshers, says Asif, the best coping strategy is to pick up AI-related skills.
“The problem with hiring freshers is that for the traditional jobs, there is resource availability in abundance. Even people with expertise and experience are in abundance. What the companies are looking for is fresh talents trained to use new technologies like AI, data science, cloud computing and virtual reality..” he points out.
Fuad, a native of Kannur in Kerala, who works as a mobile app developer in an MNC in Kochi, too says that the hiring situation has drastically changed since he joined the company in 2022.
“When I joined in 2022, the company was hiring freshers in bulk. More than 300 people attended the induction session with me on the same day. Approximately the same number of people were hired the next day also. But now, the company is hiring a very limited number of freshers,” he pointed out.
Not surprisingly, tech giants like Wipro and Infosys have turned away from campus placements this year. TCS has also informed that its intake of employees this year from campuses will be limited.
However, the fall is not limited to campus placements. “We have observed that open market hiring is also not happening,” says Joshi.
What is making it worse for new graduates is that the downturn is not limited to the big companies. Small and mid-sized companies too are in no shape to absorb the human capital.
“Unfortunately, in FY23 we have very low funding for startups, and the number of unicorns created have also come down. It is not the same situation as two years ago when startups had enough money in their pockets to hire people, getting into smaller companies is also difficult for freshers now,” says Joshi.
‘No one is safe’
Even as the freshers are most affected, the fall in demand for IT services and the technological disruption is also leaving an impact on mid-level and even senior-level employees.
“There is hardly any lateral movement. When one chooses to change jobs, usually they look for a 50-100% salary hike but today the situation is that companies, which are still hiring, are conscious about the cost. They want the right resources with the right skills, but within the budget,” says Joshi.
It’s not just those seeking a move, but also those choosing to remain who are impacted. Companies are toning down salary hikes and other incentives.
“For mid-level and senior level, it is a question of their earnings, which are coming down. The opportunities they have are very limited,” he said.
Fuad too says that his company is cutting down on salary hikes and offering it only to selected employees.
“They have cut down heavily on the increment. Now, it is just 6-7%. Only two people in my team have been offered the increment.”
With an experience of more than four years in the field, he is finding it difficult to find a new job.
“Two years ago, I used to get calls from different companies. But now, even when I have more experience, I find it harder to get an interview call.”
Asif, who is also part of the recruitment panel in his company, says that even experts with years of experience in the field find it difficult to land a new job if they do not possess enough knowledge to operate the new technologies.
Offering some relief, however, is the fact that – as of now – there are no reports of mass layoffs at the mid and senior level.
“At the mid and senior levels, what we have seen is that in the last one year, the attrition was 24%, it has now come down to below 14%,” said Joshi.
New problems, new solutions
According to industry experts, the recruitment crisis in the IT sector is reaching its lowest point.
“I think we have already bottomed out, we have already seen a huge headcount dip for the first time in the history of some of the top ten IT companies,” says Joshi.
“Now, any new attrition is resulting in new hiring. This quarter may be a little weak in the hiring, but starting from June, we expect things to stabilize. The second half of the year should be much better.”
The new jobs being created demand that candidates step out of traditional methods and explore new possibilities by making use of novel technologies.
“Companies observe technological advancements as a mechanism of increasing efficiency and cutting expenses. So job seekers should step out of their comfort zones and start experimenting with new technologies. That is the only way to land jobs in the current scenario,” points out Asif.
However, one of the biggest impediments in this is that most institutes and colleges in the country are yet to come to terms with the ever growing technological advancements.
“One limitation for the traditional institutions here is that they don't have professors who are trained in these areas. But students are overcoming this by resorting to online platforms. Something I have observed is that students who come for job interviews have an extra certificate of an online course they have done in AI or cloud computing. This helps them secure a job,” said Asif.
“At the same time, there are only a very limited number of students who can spend extra money on an online course and get the exposure. The institutes should initiate measures to train the students according to the demands in the market,” Ali observed.
“The positive side is that GCC (Global Capability Centers) is doing well,” says Joshi. “A lot of research, innovation and product designing is happening in India, that is the silver lining in the IT industry right now. Historically, GCC has served more like a support system, but today it has become a platform where talents are getting absorbed and new opportunities are created.”
Even though some doors are shutting down, others are definitely opening up for talented youth in the country.
The struggle has forced Saketh, an engineering graduate from Chennai, to become more philosophical. “It also depends on one’s destiny whether you immediately find a job or you struggle for a year or two,” he says.